Quelle Surprise! Fed Lent Over $110 Billion Against Junk Collateral During Crisis
In another twist highlighted by the statement from Sen. Sanders’ office, it turns out that the Libyan-owned bank was using U.S. Treasury securities as collateral for the low-interest loans from the Fed — effectively borrowing money for virtually no interest from the central bank, then loaning it to the U.S. government for a big profit at taxpayer expense.
Of course, countless banks were using that same strategy to rip off taxpayers, as reported by The New American last year in a piece exposing the central bank’s manipulation of markets. But the Arab bank was unique in that it was partly owned by the Libyan dictatorship — a regime supposedly under strict U.S. economic sanctions.
Nice source you have there, comrade. LOL!
the Libyan-owned bank was using U.S. Treasury securities as collateral for the low-interest loans from the Fed
So they took bonds they owned and used them for short term loans? Is this supposed to be bad? How do you think these sorts of loans usually occur?
effectively borrowing money for virtually no interest from the central bank
The discount rate was 2.25% before the crisis. 1.75% after October 8th. 1.25% after October 29th. Down to 0.5% after December 17th 2008. In Feb 2010 it rose to 0.75%.
then loaning it to the U.S. government for a big profit at taxpayer expense.
They loaned it to the government before they pledged the bonds to the Fed. The taxpayer expense is caused by the Congress spending too much money, not by the Fed accepting collateral.